Weak capital investment has been a key factor behind India's struggle to realise its growth potential and with factories running 30 percent below capacity, private companies are in little rush to make fresh investments.

"On the growth front, the central concern is with investments," said Rajan, who was speaking at a business event in Hong Kong. "Private investment has fallen back a bit and so has public investment."

The RBI has cut its growth forecast for the current fiscal year to 7.4 percent from 7.6 percent previously, well below the government's target of 8 to 8.5 percent, but still faster than China.